Railroads Avert Looming Strike


NEW YORK (AP) – Railroads have cleared a major hurdle as the industry averted a looming strike, paving the way for growth ahead, analysts said Friday.

The freight rail industry announced late Thursday it has settled labor disputes with two unions and agreed to extend talks with a third. Without the agreements, the railway unions could have launched a strike as early as Tuesday, when a federal "cooling off" period was set to expire. The agreements came just hours after Republican House leaders said they would move to vote Friday on emergency legislation to prevent a work stoppage.

The nation's four largest railroads – Union Pacific Corp., Burlington Northern Santa Fe, CSX Corp. and Norfolk Southern Corp. – all have ties to the Greater Memphis area.

Union Pacific operates an intermodal facility in Marion, Ark. BNSF operates the Tennessee Yard intermodal facility at Lamar Avenue and Shelby Drive. CSX operates the Intermodal Gateway-Memphis intermodal terminal (shared with Canadian National Railway Co.) at Frank C. Pidgeon Industrial Park. And Norfolk Southern operates Forrest Yard near the Mid-South Fairgrounds and is building an intermodal facility in Rossville in Fayette County.

Deutsche Bank analyst Justin Yagerman said in a note to clients Friday he believes the agreements remove a huge risk for railroads as well as rippling risks for the U.S. economy in the midst of the busy holiday season.

Citi analyst Christian Wetherbee said the risk to railroads is nearly gone, and added that shippers are also breathing a sigh of relief – quelling fears that they may switch shipments to trucks or pull back altogether. Wetherbee noted that many believe even if a strike were to take place, it would be short-lived.

The last time a freight railroad strike occurred, in 1991, Congress quickly passed legislation that ended it within a day. A 1982 strike lasted four days.

Dahlman Rose analyst Jason Seidl downplayed the risk of a disruptive strike because of railroad's critical role in the flow of U.S. commerce. They haul most of the country's coal that's used to produce electricity, toxic chemicals that can't be moved on highways and help deliver packages for major consumer delivery companies FedEx and UPS.

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